The Dumbest New York Times Article EVER

This is a fun story. So, you probably are wondering what this word is that I listed in the title. Amagawi. Am I'm a ai. Amii. I think it's a mugi. I think it's amongi. Amongi is an ancient Mesopotamian concept. An ancient Mesopotamian concept. I I'm going to read you. So, I I just read what has to be the dumbest editorial in the New York Times I've ever read. And that's saying a lot because this is the New York Times and they they publish a lot of pretty dumb editorials. But this one really is a piece of work. Really is a piece of work. It's written by somebody by the name of um Paul Vna. He is the author of a mightier history of money. So he's written a book about money. And this is about the debt, an ancient Samrian solution to a $40 trillion debt. It's great to see people responding with proposed solutions. Here he goes. Ancient societies had another method to deal with that. It was called amii. a blanket declaration of public debt cancellation. It's called default. All public debts written off disappeared. It sounds laughable, I know, but really that's just because the idea has been buried so deeply in history that you've probably never heard of it. In the ancient world, it presented a pragmatic solution to an intractable problem. And now faced with impossible to repay debts that are weighing down our economy is the time to look at the Amaragi and the lessons it offers about how to think about finance. Think about finance. The ancient Mesopotamians are credited with inventing money. They invented loans and compound interest. This is true. They understood this system and its propensity for breakdown. And when debt spiraled, that's why they invented something else, too. About 4,400 years ago, a Mesopotamian king named Enman Entenna issued an edict. Essentially, all public decks he declared were cancelled. Amagi typically left debts between merchants in place. People who had been sold into bondage were freed. Similar edicts gave back land to farmers who had lost their creditors. The campaign was called return to mother, the urgent of the Samrian word among um among was a response to persistent problems that was recognized in the ancient world. that compounded until it destabilized an economy, a society, get enough citizens sold into slavery and enough abandoned farms and societies crumble and society crumbles. Nobody to grow the crops, nobody to s the armies. The muggi was a relief valve, a final rebalancing tool. It was declared in the ancient near east regularly when new rulers came into power. These actions were magnanimous but also practical. They allowed society to reset rather than being forced into monetary collapse. So what do you guys think? Why not just say, "Yeah, we're calling off. We're just, you know, we're just calling off the whole thing. We're not paying it back. We're just going to stop paying interest payments on it. We're writing it off. We're we're defaulting on all of it. Now granted, the $40 trillion debt is a real crisis. It's it's insane that we owe $40 trillion. And it's insane that we keep increasing it constant by two about $2 trillion a year at least. So again, good that some people are thinking of solutions. But that's nuts to just walk away from it. It's I mean, imagine what happens. I mean, cuz it sounds costless. God, isn't it amazing? The the government doesn't have to pay it $40 trillion. And we don't have $40 trillion on the balance sheet. Taxes longterm go down. What a beautiful thing. It's it's it's it's really cool. Now, who exactly owns this debt? Who holds this debt? Who does the US government owe this to? Well, a bunch of people. I mean, yes, sure, some foreign central banks. And you can say to hell with them, said Chinese, hell with them, and hell with the Japanese. we don't care. They'll just lose all their money. They'll just write off the bonds that they'll, you know, they'll be in real trouble. They'll they'll have lost a lot of money. Uh a lot of Europeans, but who else? Well, American pension plans. So uh the pension funds that have promised you a a certain income in retirement will suddenly won't be there because they were relying on those interest payments from those bonds to pay them off and suddenly that goes to zero and those bonds were worth something and suddenly all the trillions of dollars that they invested in US government bonds evaporate. They just gone. So the actual value of American pension plans would shrink dramatically and those of us with pension plans would have a lot less income. Okay, who else? Well, retirement accounts, 401ks. I mean, a portion of your 401k, if you're well diversified, is in US government bonds. Those would all be zeroed out. Whatever your net worth is, it would be significantly less smaller insurance companies that buy government bonds. Their primary means of investment is government bonds basically. And and and that money is there to pay off your insurance when you if you die, your life insurance, if your home burns down, your home insurance, all the insurance companies in the United States, every single one of them would go bankrupt. All of them would have to file for chapter 11 or seven banks. I mean, banks use government bonds as a safe asset. Well, not so safe. It's now worth zero. And all the banks, I mean, hundreds of banks, not hundreds of banks. They're 4,500 something like that banks in the United States, almost all of them would be bankrupt. I mean, literally bankrupt. You have assets, liabilities. They would still have the liabilities. They would still owe money, but the assets that they have, a lot of them, government bonds would evaporate. They'd be gone. Um, mutual funds, your investment, your savings. A lot of people hold savings in government bonds. Gone. a lot of individuals, a lot of corporations would just have suddenly a huge loss. I mean, it's just it's like this guy's fighting as if the that there's a balance sheet. The US government has a liability here. It owes 50 trillion and nobody has those 50 trillion as assets. pension plans, insurance companies, banks, 401ks, mutual funds, uh corporations, individuals, we all have them as assets. The value of those assets goes to zero. We all get wiped out by the tune of $40 trillion minus what the foreigners. Okay, the foreigners, screw them, right? Really, one of the consequences of screw them is what happens to the $2 trillion deficits that the US treasur the US government is running every year now. How are they going to fund those? Who's going to lend money to the US ever again, ever again? If it if it stops if it wipes out wipes its debts clean. So, how are you going to fund Social Security and Medicaid? Where's that money going to come from? I mean, I'm all for that aspect of it. Maybe then maybe then they'll have to actually cut spending. But how do you do that? You just print $2 trillion additional money and that won't create inflation. And of course, we just moral element of this. Lend us your money. We promise to pay you. Whoops. Sorry. We're kind of overspent. Can't pay you back. We're going to continue spending like there's no tomorrow. We're going to continue being unbelievably irresponsible like there's no tomorrow. Whoops. Sorry. I mean, this isn't default. This is massive confiscation of $40 trillion dollar of assets that people hold of promises unfulfilled debts unpaid and that is a moral never mind financial travesty. It's it's just somebody bought particularly old people buy bonds because they're safe and they provide regular income and other politicians can say sorry you shouldn't have bought the bond. It's actually worth zero. I mean this is a major editorial in the New York Times. This is so unserious. It's so stupid. I mean and the Mesopotamians did it. ancient civilizations did it. Well, you know what ancient civilizations didn't do. They didn't grow economically. They didn't dramatically advance eologically. They had slavery. We don't have a lot to learn from the supamian civilization. Actually, I'm going to venture to say we don't have anything to learn that we haven't already learned like compounded interest and things like that. We have nothing new to learn from the Mesopotamian civilization. It was a civilization for its time. It's pretty barbaric looking backwards. No understanding of modern finance. No understanding of the balance sheet. I mean this is so ignorant. It is I mean what were the editors of the New York Times thinking in publishing this? A history lesson maybe. He says, this is how he closes the op-ed, widespread public debt forgiveness should be taken seriously, at least as a mechanism to reframe economic thinking. What? Well, its recent track record is patchy. Yeah. Including both failed debt relief for developing countries and extremely positive debt relief for the defeated access powers. It is important tool for policy makers to consider. We're unlikely to see a modern amo amo amogi. But as a set of principles for reconsidering our relationship with money, its applicability is rich. I mean, maybe there's a bigger in economics than Donald Trump. Maybe our debts aren't going to just disappear. Absence conscious effort. We are just waiting for an increasingly likely economic meltdown. Now that's true. The ancient world had a different understanding of the nature of money, which is why debt forgiveness became a standard feature of their cultures. Every time you forgave that, a bunch of people lost a huge amount of money. And it's basically a massive redistribution of wealth. We need to start seeing money and debt the way people saw it back then as a system to distribute resources that like any system can be periodically reset. Now in the process of moving towards less of economics and you really want to just wipe everything clean. It might be that we have to, you know, eliminate, write down all the debt or big chunks of the debt, but this isn't what he's saying. We just continue like we did before. We just stop paying the debt. Yeah. I don't know. Um There is there's nothing insightful here. Now, it's true in bankruptcy court, individuals can get debt forgiveness, right? You know, if you lend money to an individual, there's a risk involved. But the idea here to take the government without declaring bankruptcy and and and basically say, "Well, we're not paying the debt, without cutting spending, without rethinking our economic models. I I suggest I suggest that the government stop borrowing money. In other words, if the government balance it books, run a surplus. That is the best way to deal with that. Run a surplus and stop paying it back. Um it is it's also interesting the discussion around the $40 trillion of debt. A lot of people are saying, well, what should happen is we should raise taxes. But the reality is, no matter what taxes are, whatever rate you put them at, at least for the last 60 years, whatever rate you put them at, taxes generate about 18% of GDP. Some years a little higher, sometimes a little lower, but then if a so you can increase taxes and it's still true that taxes will bring in about 17 to 19% of GDP of the US economy. People adjust their behavior to the tax rates. So taxes rates matter for particular incentives. They don't matter for re for for total revenue to the US government. The problem is not taxes. It's not that Trump cut taxes or the Bush cut taxes. That's not the issue. The issue is spending. Spending used to be 18% of the US economy. And therefore, we had a balance. We brought in 18%. We spent 18%. 18% is ridiculously high, right? But today we're running close to 24%. And it's a there's an upward a clear upward trend. And indeed during co we spent 31% of GDP with all the stimuluses. Over this period from 1960 to today, federal spending on social programs, social programs, entitlements, welfare has risen from 21% of federal over over outlays in 1960 to 60% in 2024 and it's going and during co it was 74%. That's a spike in spending in co. Now, these are social programs that provide healthcare, income security, education, nutrition, housing, cultural services, all of the welfare stuff, including social security. They're mostly mandatory programs in which spending continues indefinitely unless Congress and the president pass new laws to change the status quo. So, taxes are going to stay at 18%. It seems like that is the level. it won't grow. Spending will increase and the deficit will increase and debt will increase and nothing they can do is going to change that. So the national debt is not a consequence of military spending. It's not a consequence of federal outlays for national defense and veterans benefit. You know, those have all plummeted from 53% of federal expenditure in 1960 to 17% in 54. This is all about social programs, right? Social programs. And if you include interest on the debt, that's 76% of federal spending. 76% of federal spending. Social programs, interest on the debt. So it's not an issue of the tax cuts. It's not fed, you know, military spending. It's all just one thing. One thing.